For tech other than batteries, the economics look good right now.

The two fastest growing sources of renewable energy, wind and solar, are intermittent—they don't always generate power when you need them to. The obvious solution is to add storage, like batteries, to shift some of the electricity to when demand is highest. Elon Musk is betting a Gigafactory that consumers are going to be interested in doing this, while California has mandated that 1.3 gigawatts of storage be added to the power grid before the decade is out.

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But there are a number of different types of storage, each of which has distinctive properties: how fast electrons can be shuffled in and out, how easy it is to expand the storage capacity, and so on. All of these have different costs, and figuring out what storage is most economically viable is a serious challenge.

Three academics from MIT have decided to take up that challenge. They've tried to calculate when it makes economic sense to add storage to renewable projects in three different locations in the US. Their analysis indicates the finances among options are similar right now, but only for options other than batteries.

Running the numbers

The authors decided to model three different states: Texas, where wind is big; California, which is seeing a solar boom; and Massachusetts, which isn't an optimal location for generating renewable energy. They also considered several different storage technologies. These included a number of different battery types (lead acid, sodium-sulfur, lithium-ion, and so on), as well as compressed air storage and pumped hydro. Compressed air involves pumping air into an underground cavern and using it to supplement fossil fuel generation, while pumped hydro is like a hydroelectric dam that can also run in reverse.

For each location, the authors optimized the use of storage in terms of getting the best price for electricity generated by renewable sources. In practical terms, this meant modeling the discharge of the storage so that the energy generated by a renewable plant was always sold when demand (and therefore price) was highest.

Renewables still have some way to go before it makes sense to hook them up to a giant pool of storage.

Of course, this storage comes at a price. In the next step, the team considered two factors that vary based on the type of storage used: the cost of power, which is how much it costs to build the capacity to shuffle electrons in and out of the system; and the cost of energy, which is the price involved in building a bigger storage pool.

The results indicate that, in both Texas and Massachusetts, storage is more valuable for wind than it is for solar, but the differences aren't large. The total value provided by storage is highest in California and Texas.

But that value still isn't great. Only two of the technologies available today (compressed air and pumped hydro) actually add value to wind and solar. Adding the storage would be profitable only at prices that are slightly below any available on the market right now ($1.5 per Watt for wind). At that point, storage boosts wind's profitability by 11 percent. Thus, renewables still have some way to go before it makes sense to hook them up to a giant pool of storage. And batteries have even further to go before it makes sense to use them to build that pool of storage.

The authors also did projections using expected changes in cost for both renewables and storage technology. In some cases, these pushed more potential scenarios into profitability.

A rapidly changing market

The analysis, however, was limited in a number of ways. Storage can provide a wide range of valuable services, including grid stabilization and frequency management. If the storage is also used for those purposes, it becomes more profitable to have some. In addition, the US energy market doesn't currently have so many renewables that the price of electricity is consistently affected by them in most locations. Once states start seeing huge surges of, say, solar electricity at mid-day, it will depress the price of that energy and make storage more appealing.

But not everything makes storage look positive. Over the recent past, the price of renewables has dropped dramatically—faster than the price of storage has dropped. If that trend continues, it will pose trouble for storage, since it becomes more economical to just sell the power at a moderate price than to spend money to build storage to hold it for when the price is high. And, if you do want to spend money, it makes more sense to spend it on adding more renewable capacity.

So, in many ways, this analysis captures a snapshot of a rapidly changing market. But the tools the authors have developed to perform the analysis can be updated and modified to accommodate any future changes. And, as more states start to mandate putting storage on the grid, this analysis can definitely help policymakers understand what types of storage make the most economic sense.